FOREX-Dollar jumps as rising wages stoke inflation expectations

NEW YORK Oct 6 (Reuters) - The dollar jumped to more than
two-month highs against the yen and seven-week highs against the
euro on Friday after the government’s jobs report for September
showed rising wages.

Average hourly earnings increased 12 cents or 0.5 percent in
September after rising 0.2 percent in August. The gains came as
nonfarm payrolls fell by 33,000 jobs last month after Hurricanes
Harvey and Irma left displaced workers temporarily unemployed
and delayed hiring.

“I think most people realized going in that the headline
numbers would be distorted because of the storms, but the
surprise was the average hourly earnings,” said Win Thin, head
of emerging markets currency strategy at Brown Brothers Harriman
in New York.

“This is the missing piece in the Fed’s puzzle,” Thin added.
“I think the dollar rally is back on track and should continue
next week.”

The greenback jumped as high as 113.41 yen, the
highest since July 14. The euro fell to as low as $1.167,
the lowest since Aug. 17.

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Improving U.S. data along with the prospect of U.S. tax
cuts and the likelihood that the Federal Reserve will raise
interest rates in December have boosted the U.S. currency in
recent weeks.

Interest rate futures traders are now pricing in a 93
percent likelihood of a December rate hike, up from 84 percent
on Thursday, according to the CME Group’s FedWatch Tool.